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    General Motors - Economic Indicators

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    1. Current ratio
    2. Quick ratio (acid test)

    Define each

    ? Describe current status

    ? Do a graph illustrating a historic trend (5 years)

    ? Analyze the relationship among inflation, unemployment and the business cycle.

    ? Evaluate the impact of inflation, unemployment and the business cycle

    ? Explain if the conditions are consistent with the Keynesian or classical economic theory.

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    Running Head: GENERAL MOTORS

    General Motors
    General Motors Economic Indicators
    1. Current Ratio: This economic indicator of the General Motors evaluates its short term solvency and also shows its ability to meet short term obligations, within the prescribed duration of time. The current ratio depicts that the short term solvency of the General Motors is not good because the current ratio of 2:1 is considered as the satisfactory, but General Motors have 0.85:1, it means that for every dollar of current liabilities, the company only have 0.85 current assets. Thus, General Motors will not be able to pay off its current liabilities in full, when they are due.

    2. Quick ratio (acid test): Quick ratio also evaluates the liquidity position of the General Motors. The ratio of 1:1 is considered satisfactory. The company's current ratio shows that its current status is quite poor to meet unexpected demand for working capital. Here, the situation shows that General Motors have only 0.57 liquid assets to pay every dollar of current liabilities.

    Current Status:
    General Motors Corp. is the world's largest automaker, established in 1908 in Detroit. Over the 75 years, it is global industry sales leader operated its business operations in more than 33 countries and 327,000 numbers of employees work within the GM. The company' promote its products in the global market under the following brands such as Cadillac, Chevrolet, GM Daewoo, HUMMER, Pontiac, Saab, Saturn and Vauxhall, etc.
    In the market, the company's current status is not quite good, its total sales revenues is continuously showing decreasing trend over the past years. The financial highlights of the General motors evaluates that its profitability position i.e. profit margin (-33.99%) and operating margin (-5.14%) is very poor because it is in negative percentage and Management effectiveness assets is also not good. Its return on assets is -3.42%. It means that General Motors did not use its funds effectively.
    The income statement also highlighted that its position in the market is quite poor. Its quarterly income growth (-18.30%), EBITDA (-6.56B), net income available to common (-103.19), etc. all figures are in negative. The liquidity and short term solvency ratios of the General Motors reflect that the company does not have adequate funds to repay its current obligations when they are due (Yahoo Finance). The current status shows that the company faces various critical situation such as in the North American market, General motors face the slipping of the market share, increased raw materials cost because of these situations, since ...

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